Hogs: The prime reason for the sharp run-up in prices in the past four days was confirmation that the worst of the supply glut was behind us. At that time, not only were supplies going to get more manageable, but it was right when the normal buying period for National Pork Month starts.
Our research from mid-September showed the lean hog index, a measure of cash hog prices, normally rallied during this time by 18 days. The average bottom for cash hogs was Sept. 13 and the average peak was Oct. 1. This year’s cash hog low was made on Sept. 18 and today makes it 11 days of gains. We are not sure if this year’s rally will make it the full 18 days but this tells us to hold off from sales though.
For trading positions we are now neutral after exit from our two long positions.…Rich Nelson
Cattle: Wednesday morning’s ADP National Employment Report showed September job growth of 162,000. This covers private sector growth. Though it was a great number, the trade would rather wait until Friday’s government take on the job issue. This could do a lot toward shedding light on the harder issue in the beef complex to consider: U.S. consumer demand.
At this time, bids are still $121 while asking prices are $125. This puts the mid-point at $123, right where last week’s trade occurred. We will give this market a little while longer to get over its short-term weakness before suggesting buying.
Keep in mind though that futures are already in the process of recovery; 50% retracement of the decline in the December contract would come in at 127.65. That is not too far from today’s highs…Rich Nelson